Cumulative and Non-cumulative FDs differences at a glance!

by admin | April 3, 2018 11:58 am

First things first!

Cumulative fixed deposits could be described as fixed deposits where the interest payment is available to investors only on its maturity or the end of the tenor. If you select a cumulative type of fixed deposit, you won’t be provided any periodical interest on a monthly, quarterly, and annual basis.

Also, the interest earned on a cumulative FD is compounded on a yearly basis. The Fixed Deposit Investment[1] accumulates the interest over a tenor, and you can break it prematurely. A cumulative fixed deposit facility is apt for investors who are in for long-term investment and want a good amount only at the end of the tenor.

Non-cumulative fixed deposit, on the other hand, works on the opposite principle. Under the same, the interest payments are provided to an investor in a steady, periodical and timely fashion. These types of FDs are the first-choice of senior citizens or those who may wish to use the money at any point.

As a result, investors get interest payments on a monthly, quarterly and annual basis. Investors are also entitled to decide their time when they want interest payments.

The advantage of cumulative FDs

Now that the basics of the cumulative FDs are here lets know its biggest benefit!

The portability of acquiring the highest possible ROI

It’s possible! It’s because the cumulative FD’s interest rate is accumulated and compounded, you get a maturity amount which is high! The final amount in the result of the principal along with interest earned! The amount that you can make out is well numbered, and you can use it for any goal.

The advantage of non-cumulative fixed deposit

Since you have an idea of the non-cumulative fixed deposit, let’s give an account of its biggest benefit!

The offering of the regular interest payments

A non-cumulative FD investment scheme provides you regular interest rates on FD[2] payment, a regular basis source of income. Under this scheme, investors can go ahead and receive their interest payouts comfortably on a monthly, quarterly and yearly basis.

Fixed deposit benefits that you must have a look at!

No matter what you choose – a cumulative or a non-cumulative fixed deposit scheme, an FD offers you plenty of benefits such as:

– Higher ROI

– Safety of your funds

– Assured or sure-shot returns

– Highest ROI for senior citizens

– Flexible tenors

– Online application process

– An online account management system

The Bottom Line

You just analyzed how a cumulative, as well as non-cumulative fixed deposit scheme offers such unique benefits to complement your needs and affordability. If you are looking to apply for a fixed deposit, you can do it online and avail enticing benefits over a tenor!